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6/25/13

Direct Taxes Meaning - Merits and Demerits of Direct Taxes

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Direct Taxes Meaning - Merits and Demerits of Direct Taxes
Post : Gaurav Akrani Date : 12/04/2010 09:16:00 AM IST No Comments Labels : Economics

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What are Direct Taxes ? Meaning ↓
A direct tax is one, which is paid by a person on whom it is legally imposed and the burden of which cannot be shifted to any other person. The person from whom it is collected cannot shift its burden to anybody else.

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The tax-payer is the tax-bearer. The impact i.e. the initial burden and its incidence i.e. the ultimate burden of direct tax is on the same person. For e.g. Income tax, wealth tax, property tax, estate duties, capital gain tax, corporate / company tax, etc. are all direct taxes. What is Finance? Meaning Definition Features of Finance What is Financial Planning? Meaning Types of Financial Plans Scroll TopWhat is Financial Management? Meaning Definition Scope Articles What is Corporate Finance?

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Advantages / Merits of Direct Taxes ↓
Following are the important advantages or merits of Direct Taxes :-

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Organizational Structure . For instances. Responsibility and Accountability In Management Principle of Delegation of Authority . 1. the taxpayers are made to feel directly the burden of taxes and hence take keen interest in how public funds are spent. the government has to set up an elaborate machinery to collect taxes. in the case of personal income tax. individual with an income of upto Rs. With an increase in tax rate. Definition and Features of Bank Different Types of Banks . the Government can make adjustments in its income and expenditure. Creates Public Consciousness They have educative value.blogspot. 3. in the Indian Budget of 2007. the exemption limit is Rs. Equity There is social justice in the allocation of tax burden in case of direct taxes as they are based on the principle of ability to pay.Employee Motivation David McClelland's Achievement Motivation. With an increase in income and wealth of individuals and companies. Relatively Elastic The direct taxes are relatively elastic. An increase in tax rates would increase the tax revenue. the government does not have to spend much in tax collection as far as personal income tax is concerned.The Advantages of ATM Machine E-Banking .Introduction Objectives Demerits Narasimham Committee Report I 1991 II 1998 . Economical Direct taxes are generally economical to co llect.html Javascript Kalyan City 2/5 .Definitions. Elasticity also implies that the government's revenue can be increased by raising the rates of taxation.What it Includes? What is Credit Rating? Meaning and Articles on Credit Rating Authority. Advantages What is Current Bank Account ? Its Features and Advantages Recurring Deposit Account In Bank .Motivation Hygiene Factors Douglas McGregor's Theory X and Theory Y .Liabilities and Assets How to Open Bank Account ? 7 Steps To Open Bank Account What are the Advantages of Opening Bank Account ? Saving Account Bank . in the case of indirect taxes.Loan Types Duties and Responsibilities of Computer Operator in Bank Nationalisation of Banks in India .10. Persons in a similar economic situation are taxed at the same rate. Accordingly.Meaning. Certainty As far as direct taxes are concerned. Features.Leader Qualities .Features of The Advertising Management Quality Control Total Quality Management TQM Quality Circles 1. Features and Advantages of It 2. the yield from direct taxes will also increase. CATEGORY Administrative Law Advertising Banking Blogger Business Development C Programming Communication Skills Distinguish Between Dombivli City Economics Education Finance Health How To India Industrial Psychology Internet 5. as the tax rates are decided in advance. which in turn may reduce inflation. the consumption demand may decline.Online Banking Main Advantages of E-Banking Principles of Good Lending Every Banker Follows . The taxpayers are likely to be more aware about their rights and responsibilities as citizens of the state.000 are exempted from payment of income tax and in the case of women tax payer. The Government can also estimate the tax revenue from direct taxes with a fair accuracy.Leadership Theories Human Resource Management . Progressive direct taxation can reduce income inequalities and bring about adequate social & economic justice.Human Resource Development Motivation Motivational Factors Incentives Theories of Motivation Maslow's Hierarchy of Needs The Theory of Human Motivation Frederick Herzberg's Two Factor Theory .45.Credit Policy of RBI 4. the tax can be deducted at source from the income or salaries of the individuals.Merits and Demerits of Direct Taxes Meaning . During inflationary periods.com/2010/12/direct-taxes-meaning-merits-and. the tax payer is certain as to how much he is expected to pay.Recommendations New Economic Reforms of the Banking Sector In India . the government may increase the tax rate. 1.Meaning and Features What is a Cheque ? Definition Kinds and Types of Cheques What are Features of Cheques ? Main Characteristics of Checks What is Crossing of Cheque ? Different Types of Check Crossing Automated Teller Machine (ATM) .Importance of Delegation Organisation .Management Article What is Market Segmentation ? Importance In Modern Marketing 5 M's of Advertising . Disadvantages / Demerits of Direct Taxes ↓ Though direct taxes possess above mentioned merits.6/25/13 Direct Taxes Meaning . Hence. In the case of direct taxes. the economist have criticised them on the following grounds :- 1. Persons with different economic standing are taxed at a different rate.Brief Functions of Reserve Bank of India (RBI) . there is both horizontal and vertical equity under direct taxation. Therefore. Manifest Need Theory Marketing Mix and 4 P's of The Marketing . Tax Evasion kalyan-city. Primary Secondary Functions Balance Sheet of Commercial Bank . Fixed Deposit Account of Bank Meaning. 6. For example. Anti-inflationary The direct taxes can help to control inflation. However.Loans Different Forms of Advances by Commercial Banks .Organisational Chart Decentralisation Advantages and Limitations of Decentralization Managerial Leadership . BANKING What is a Bank ? Introduction.000.What are Various Kinds of Banks ? Commercial Banks .

blogspot. Certain sectors like the corporate sector is heavily taxed. there is Sectoral imbalance as far as direct taxes are concerned. This in turn may have a negative impact on investment and productive capacity in the economy. Documentation and formalities. there is good amount of tax evasion.. are determined in an arbitrary manner. 6. Reduction in savings results in low investment. For most people payment of direct tax is not only inconvenient. Direct tax is considered inconvenient by some people because they have to make few lump sum payments to the governments. Poor and corrupt tax administration. It is estimated that only three percent of the population pay persona l income tax. 5. Arbitrary Rates The direct taxes tend to be arbitrary. Sectoral Imbalance In India. due to high rate of progressive tax evasion & avoidance are extensive and led to rise in black money. 4. High taxes also discourage people from working harder in order to earn and save more. the government does not get enough funds for public expenditure. wealth tax. If tax burden is high. In less developed countries like India. 7.Merits and Demerits of Direct Taxes Life Guides Management Marketing Research Mumbai People Photos Places In India. the net income of the people gets reduced. there is a narrow coverage of direct taxes. Production Planning Reptiles Science Snakes Study Notes Thane Ulhasnagar 3. When people are required to pay a sizeable part of their income as a tax to the state. 2. Therefore direct taxes may not always fulfill the canon of equity. A precise degree of progression in taxation is also difficult to achieve. Videos Youtube KALYAN CITY LIFE BLOG is a part of © Vedanga Infomedia. The tax evasion is due to High tax rates. The low investment affects capital formation in the country. etc. Also. the exemption limits in the case of personal income tax. Due to taxes. Estate duty & wealth tax are equally narrow based and thus revenue proceeds from these taxes are invariably small. Critics point out that there cannot be any objective basis for determining tax rates of direct taxes. Inconvenient Direct taxes are inconvenient in the sense that they involve several procedures and formalities in filing of returns. whereas. it is psychological painful also. Effect on Willingness and Ability to Work Highly progressive direct taxes reduce people's ability and willingness to work and save. whereas their income receipts are distributed over the whole year. the kalyan-city. Due to low coverage. They invariable suppress correct information about their incomes by manipulating their accounts and evade tax on it. It is easier for the businessmen to evade direct taxes. Narrow Coverage In India. This in turn reduces savings.com/2010/12/direct-taxes-meaning-merits-and. Further every one who is required to pay a direct tax has to furnish appropriate evidence in support of the statement of his income & wealth & for this he has to maintain his accounts in proper form. they feel very much hurt and their propensity to evade tax remains high. Affects Capital Formation The direct taxes can affect savings and investment. people's consumption level gets adversely affected and this has an impact on their ability to work and save.html 3/5 .6/25/13 Direct Taxes Meaning .

A rich country has greater scope for direct taxation than a poor country. . Related Articles Direct Taxes Meaning . The extent of direct taxation should depend on the economic state of the country. .KCL Article Translation 0 Comments : Please Comment E n t e ry o u rc o m m e n t . The disadvantage of direct taxation are mainly due to administrative difficulties and inefficiencies.com/2010/12/direct-taxes-meaning-merits-and.html 4/5 . However direct taxation is an important aspect of the modern financial system. Even the large rich farmers are exempted Conclusion On Direct Taxes ↓ In direct tax burden of tax cannot be shifted.blogspot.Merits and Demerits of Direct Taxes Atom Feed of Kalyan City Life Blog .Merits and Demerits of Direct Taxes agriculture sector is 100% tax free. Comment as: Google Account Publish Preview Next Post Home Previous Post kalyan-city.6/25/13 from payment of personal income tax. Direct Taxes Meaning .